China's B2C market gains share

8 April 2014

BEIJING: Chinese online consumers appear to be turning away from consumer-to-consumer (C2C) platforms in favour of business-to-consumer (B2C) ones, although both continue to grow at double-digit rates.

According to figures from iResearch, an internet consultancy, the C2C market accounted for almost two thirds (64.9%) of the country's online retail sales in 2013, but it expected that the B2C sector would overtake C2C by 2017 as it was growing twice as fast.

Observers put forward a number of reasons for this development. "More and more online shoppers prefer B2C platforms rather than C2C platforms such as Taobao due to the former's better product quality and better services," Wu Sheng, an analyst with internet consultancy Analysys International, told China News.

And Kelland Willis, an associate analyst with the Forrester Research consultancy, said that the C2C landscape in China had been inflated as a result of a lack of alternative attractive online offerings.

"We see that consumers are starting to understand and appreciate the value that other B2C websites, like Tmall, JD and the brand's own direct approach to consumer sites offer," he said.

"This isn't a result of Taobao performing poorly," he added, "but a result of more competition entering a space where there wasn't any for a long time."

Separate data from the China e-Business Research Centre (CBRC) suggests that it is not only consumers who are having second thoughts about C2C sites. It estimated that the number of private C2C e-tailers was down 17.8% year on year to 11.22 million at the end of 2013 and predicted a further fall to 9.18 million by the end of 2014.

"With the maturing of the online retail market in China and increasing demands of online shoppers, private C2C e-retailers have to consistently improve in terms of providing better quality and better after-sales service amid fierce competition," said Mo Daiqing, the CBRC's senior e-commerce industry analyst.

Anecdotal evidence indicated that the pressures of maintaining visibility in a crowded marketplace such as Taobao were taking a toll. One etailer said he was moving to a smaller online marketplace: "The opportunities to make a fortune [on Taobao] are small but the risk of losing money is rather high," he explained.